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NEW BRITAIN — Following a tense public spat over the direction of utility regulation in Connecticut, state regulators at PURA on Friday approved a much smaller increase in electric rates than requested by United Illuminating, calling the decision a “roadmap” for transitioning to performance-based ratemaking.
United Illuminating — which provides electric service to about 344,000 customers in Fairfield and New Haven counties — had requested a revenue increase of $131 million, about 35 percent, over the next three years. According to PURA, that would have increased the average customer’s bills by 11 percent, and more than $200 over the first year.
Instead, PURA commissioners voted 3-0 to approve a one-year revenue increase of about $23 million — increasing the average customer’s bill by $65 over the next year.
PURA Vice Chair John Betkoski said rate cases are difficult. Usually nobody is happy with the result, he said, but he said state regulators try to find common ground. Betkoski said he felt the decision accomplished that, and hoped UI was receptive to the result.
“The bottom line is we’re accountable to the ratepayers in terms of how we regulate our utility companies in the state of Connecticut,” Betkoski said. “They want safe, reliable, affordable power at cost-effective rates. I think in this decision, that’s what we have done.”
An earlier draft decision had called for a revenue increase of $2 million, and United Illuminating reacted with a public relations and lobbying campaign to press the message that the decision would stifle outside investment in the company and hinder its ability to make critical infrastructure upgrades.
In turn, some state lawmakers and officials criticized that campaign for going too far in attempting to coordinate public pressure to sway PURA’s decision. Leaders of the state legislature’s Energy and Technology Committee stood by the state regulator, saying the authority was following their instructions to hold the state’s utilities accountable for their performance, and to ensure that Connecticut customers, who pay among the highest electric bills in the country, are getting good value.
UI spokesperson Sarah Wall said on Friday that the company is evaluating the final decision.
PURA Managing Director of Technical Staff Josh Ryor said during the meeting that the decision allows UI to recover the cost of $500 million of new projects, approves 47 new employees including 21 “electric field operations” employees and 13 customer service employees, and all the employee training expenses UI requested.
“Nothing in this decision prohibits UI from continuing to make capital investments in its distribution system,” Ryor said. “And specifically the decision notes the company may seek recovery in a future rate case of any capital additions already incurred or incurred in the future.”
The decision also includes two penalties on UI’s allowed return on equity, including a 0.2 percent cut meant to incentivize improved customer service, and another 0.2 percent for failing to clean up the shuttered English Station power plant in New Haven.
The UI decision follows decisions earlier this year to reject a rate increase by Eversource subsidiary Aquarion Water, ordering a rate cut for the company’s customers instead.
Gillett said at the time that the Aquarion decision set the standard for any requests for rate hikes going forward. But the commissioners were split on that decision, with Caron and Betkoski both expressing concern that the decison would chill investment in water infrastructure in Connecticut.
Aquarion appealed that decision, and New Britain Superior Court Judge Matthew Budzik ordered a stay to halt the rate cut until the appeal is resolved.
But Commissioners were in agreement on Friday, voting 3-0 without stated reservations.
Commissioner Michael Caron said UI made some valid points in their response to the draft decision, leading to some adjustments in their favor. That included restoring the company’s allowed return on equity to the current 9.1 percent, and eliminating the financial penalty for what PURA found were failures in response to Tropical Storm Isaias in 2020.
Caron called the decision a “roadmap” for the state’s dealings with utility companies.
“I think it’d be helpful to begin to use this decision as something like a roadmap where we can all reach a place where we can all reach a place where UI and their investors are justly compensated for their investments and efforts,” Caron said. “And [where] ratepayers, legislators and other parties to our proceedings are satisfied they’re receiving verified value.”
Energy Committee co-chair State Sen. Norm Needleman, D-Essex, praised state regulators for protecting Connecticut electric customers from escalating costs.
“Despite unprecedented pressure from utility company leaders and lobbyists, PURA took a look at the hard facts involved in UI’s rate case request,” Needleman said in a statement. “Their actions today follow the spirit of increased regulations focused on performance sought in recent years including the Take Back Our Grid Act and this past year’s Senate Bill 7.”